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TM’s internet business gives strong showing

By Sharmila Ganapathy-Wallace February 22, 2017

First time Internet division has surpassed other divisions during full year period

Internet business grows 8.9% to rake in US$825 million in revenue

TELEKOM Malaysia Bhd (TM)'s Internet business -- which comprises its Streamyx and Unifi services - ended the financial year 2016 with an 8.9% growth to bring in US$825 million (RM3.67 billion) in revenue.

The division also ended the year as TM's largest revenue contributor, surpassing the group's long-dominant voice business of RM3.33 billion in revenue, followed by its data business (RM2.75 billion) and *others (RM2.3 billion). (RM1 = US$0.22)

(*Note: Its other businesses include other telco and non-telco services, including business process outsourcing, education, and others)

It is also the first time the group's Internet division has surpassed other divisions during the full year period. Previously, TM's Internet business was the group's top revenue contributor on the quarterly basis.

The group's Internet business now contributes 30% to the group's total revenue, a big improvement compared to the 25% contribution in 2013, and the 27% contribution in 2014 and 2015.

"The growth is mainly driven by upselling activities, higher Unifi take up rate, and higher buys of premium channels," said the company in its presentation slides to investors on Feb 22.

During the year, TM's Unifi business grew significantly. It ended the year with 949,000 Unifi customers, a 13% improvement from the 839,000 Unifi customers a year ago.

The growth of 110,000 Unifi customers was able to offset the decline in its conventional Streamyx customer base -- which saw a decline of 80,000 customers during the year.

Equally impressive was its Unifi average revenue per user (ARPU) -- an indicator of how much a customer spent on its Unifi bills a month. In 2016, its Unifi ARPU rose from RM190 a month to RM201 a month.

"Higher ARPU growth is mainly due to upselling and higher buys of premium channels," said the company.

Full year group performance

For the full year ended Dec 31, 2016, the group recorded a 2.9% growth in revenue to RM12.06 billion, while net profit rose 10.8% to RM776 million.

The jump in revenue was mainly driven by its growing broadband business, while the higher bottomline was driven by the lower foreign exchange (forex) losses incurred.

During the year, the group recorded a forex loss of RM86.7 million, a big improvement compared to the RM184.4 million forex loss a year ago.

TM also managed to grow its earnings before interest, tax, depreciation and amortisation (Ebitda) by 2.5% to RM3.79 billion (2015: RM3.69 billion).

"2016 was both exciting and challenging for TM. Over the year, we saw an aggressive rollout of LTE and launched webe. As expected we saw increased expenditure in the last quarter as we kicked off the Year of Convergence, said TM group chief executive officer Zamzamzairani Mohd Isa in a statement.

"Overall, we had a solid FY 2016 performance with revenue growth seen across all customer clusters mainly driven by non-voice revenue. Our broadband customer base remains strong, led by UniFi," he added.

"We also closed the year with a wider High Speed Broadband (HSBB) footprint of 2.23 million ports nationwide, with an overall take up rate of 42.6%. As at Dec 31, 2016, we had more than 949,000 customers activated at 4Q 2016. Seventy-nine percent of them were on the speed of 10Mbps and above.

"The strong take up of our higher value packages and more people buying content, as well as traction in upselling resulted in a strong ARPU trend," said Zamzamzairani.